* Conservatives opposed to more euro transfers
* Scholz defends unemployment insurance system
* CSU says reforms could split European Union (Releads with Scholz)
By Tom Körkemeier and Gernot Heller
BERLIN, June 20 (Reuters) - Germany's finance minister on Wednesday defended a euro zone reform blueprint agreed with France against criticism by Chancellor Angela Merkel's conservatives that it could undermine monetary stability.
Members of Merkel's conservative bloc opposed to larger financial contributions to the euro zone reacted with scepticism to her agreement with French President Emmanuel Macron to create a common budget for the currency bloc.
Merkel and Macron hailed a "new chapter" for the euro zone after talks at the Meseberg retreat outside Berlin on Tuesday where they praised the budget as a tool to strengthen economic competitiveness in the currency union. But details were scant.
Merkel's conservative bloc is divided over immigration and stiff resistance to the euro zone plans could further erode her authority and threaten to unravel her coalition government three months after it took office.
Finance Minister Olaf Scholz, whose Social Democrats (SPD) are Merkel's junior coalition partners, said in a speech at a banking event that the euro zone budget was only a small component of the reform package agreed with France.
"We are standing at a crossroads and we have decided to go down a well-paved street called the European Union," he said.
Conservative lawmakers, especially from the Christian Social Union (CSU), the Bavarian sister party of Merkel's Christian Democrats (CDU), are not convinced.
"The CSU will not be part of any attempt to join a transfer union," Markus Blume, the Bavarian party's general secretary, told the Ausburger Allgemeine newspaper. "Financial robustness and monetary stability are non-negotiable for the CSU."
The two leaders had decided to focus on broad issues to leave more room for negotiations with the other 17 euro members, which leaves scope for the plans to be watered down.
"For us this is more like splitting Europe because countries that are not using the euro will be excluded. I am stunned by the promise that was given to Macron," he added, referring to Merkel's support for a euro zone budget.
Scholz said however that differences over plans to introduce an EU-wide deposit guarantee scheme were still to be bridged. Germany and eight other EU members say euro zone banks must first reduce exposure to risks before the project can start.
"Now it's about the details. Much remains unclear and should be made public, including the size of the new euro budget and the level of German contributions," said CDU lawmaker Eckhardt Rehberg, parliamentary speaker on budget policy for the CDU/CSU.
"We will have to look carefully at the justifications given for new euro funds and credit lines in addition to existing ones," Rehberg added.
Under the system, a euro zone member facing an economic crisis that leads to massive job losses and a heavy burden on its social-security system could borrow from a joint reinsurance fund. (Writing by Joseph Nasr Editing by Matthew Mpoke Bigg)(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)